Back in 2006 I purchased a real estate property and the mortgage service bank was Bank of America. The mortgage broker requested income tax documents from my preparer and indicated to him how much specifically I was supposed to show in the forms 1040, the income was inflated like 2 times, but I did have enough money cash and good job, i paid 35% in d/p so the bank and the broker were very willing to proceed. I also signed the forms at that time that the bank request to verify income with the IRS. As you know properties went down in value and now the bank doesn’t want refinance because of the fact that I owe more than the market value of the house. I am planning to joing a Mass Tort Suit against banks headed by The Resolution Group from CT, they already filed in federal court and have docket and it looks like cases are moving ahead
Would the bank be able in counter suing me for the income tax forms I signed at that time which they nicely accepted to process my mortgage and deny me the gains that The Resolution Group is planning to get?
I understand your situation perfectly as a lot of the same situation is happening to people; properties dropping in value, large down payments being lost, no equity, owing more than what a house is worth, etc. It is not a good position to be in.
One thing to keep in mind is that any loss or drop in equity is not experienced until the house is sold, or in your case refinanced.
Why are you trying to refinance? I would venture to lower your monthly payments, but can you afford the payments as they are?
Your question about BOA counter-suing and your “mass tort” or action suit against the lender really is a legal question/issue and would need to be addressed by an attorney.
As for your concerns due to the fact your tax returns were inflated doesn’t surprise me totally, as when I was in the mortgage industry this for some mortgage brokers was common practice, but that was in the late 80’s. By having such a large down payment you could qualify for a no-doc type loan, which means no income verification was really required, and the mortgage lender could underwrite the loan after it was granted. If you knew the income stated was incorrect and signed the forms, then this could be viewed in a very dim light. As to if it would be brought to light and used against you, I cannot say, and again it would be a legal matter.
Please post your responses and follow-up messages to me on this in the comments section below.